In a case of first impression in New York, CLM obtained dismissal of a trustee’s in terrorem petition seeking to claw back two beneficiaries’ personal bequests based on their approval – in their separate roles as directors and officers of a nonprofit organization – of a lawsuit brought by the nonprofit against the executor of the estate and trustee of a trust containing decedent’s assets. No New York court had previously decided the issue of whether beneficiaries acting in a fiduciary capacity could lose their personal bequests by challenging instruments with an in terrorem clause. In this case, Radio Drama Network, a nonprofit founded by radio pioneer Himan Brown, had filed a proceeding against the trustee, who was attorney-drafter of trust amendments that disinherited the nonprofit and diverted the $100 million estate of Mr. Himan Brown to an entity that the lawyer controlled. That lawyer, as trustee of the decedent’s revocable trust, then brought an in terrorem proceeding to claw back personal bequests to directors who were also granddaughters of Mr. Brown.
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